Best Stocks to Start Investing NOW [And How I Find Them]
Note: Post may contain affiliate links.
Three criteria I use to find the best stocks to buy today and hold forever plus how to start investing long-term
So you know you have to get started investing but you just don’t know where to start. The investing networks and advisors have a knack for over-complicating investing so you're forced to depend on their analysis.
By the end of this video, you’ll have a strategy for finding the best stocks to start investing, how to find stocks you can hold forever and not worry about the ups-and-downs of the stock market.
In fact, this strategy is going to give you a core part of your portfolio you can count on in any market.
Where to Start Investing Your Money
I’m excited for this video because I love talking about investing here but I hear so often from investors that they just don’t know where to start. That’s why I decided to put this video together in partnership with The Motley Fool to show why it’s so important to get started investing and how to find your first stocks to buy.
After I show you why it’s so important to get started investing, I’ll walk you through three criteria I use to find the best stocks for my portfolio. I’ll then use these criteria to highlight two of my favorite investments for right now.
We talk a lot about beating debt on the channel and I know a lot of you might be waiting to pay off debt before you start investing.
Don’t Do It!
There are two problems here. First, you may never get totally debt free. Spending money is just too much fun, right? You should pay off that high-interest credit card debt but waiting 30 years to pay off the mortgage just isn’t financially smart.
More important though is the huge opportunity you miss when you wait to start investing. Investing just $50 a month will grow to almost $200 grand if you start in your 20s. Wait until your 40s to invest and you’ll have to save a lot more every month to meet your financial goals.
The Best Investing Strategy for Beginners
There are a lot of strategies for picking stocks. One strategy that every beginner investor needs to start with is what I call forever stocks or starter stocks.
These are stocks of great companies you can hold for decades to earn strong returns and not have to worry about them.
You see, investing is all about the long game. I love talking stock picks but trying to find short-term investments to beat the market is a lot of work, like digging the grand canyon with a teaspoon. Filling your portfolio first with these starter stocks though will give you a base, a core portfolio you can count on.
Criteria to Find Great Stocks You Can Hold Forever
So how do you find these starter stocks, what are the characteristics you can look for in stocks you can hold forever. The Motley Fool comes out with a list of starter stocks every year as a bonus report with analysis on each stock and what it looks for.
Get the Bonus Report on The Motley Fool
I’ll be using some of the characteristics they talk about in the report but you can also use the stock screener on the website to find starter stocks.
Finding stocks you can hold forever is equal parts past performance and potential for future growth. I first start with companies that have a proven track record. What’s important here is their performance versus competitors in the industry so we’re looking at things like sales growth, profitability and cash flows for the company and for their industry as a whole.
Once you’ve narrowed it to a short list of companies with this outperformance in the industry, you have to decide whether they can continue that performance. There are a couple of characteristics that will help a company keep beating its industry.
Examples of Great Forever Stocks
First is exemplary management and culture, this means management that borders on a cult of personality like Jeff Bezos or Elon Musk and a strong corporate culture of teamwork. One of the best ways to look for this is the annual best places to work by Fortune or some of the other sites.
Another criteria to look for is opportunities for growth in the industry. When I’m looking for growth stocks, I like to look for entire industries benefiting from fast growth. That’s going to be a tailwind for any company in the industry so after that, I only need to look for the leaders in the group.
Now having any of these criteria will probably help it achieve strong growth but frankly, I want to see both of them to qualify as stocks I can hold forever.
I looked through this year’s Starter Stocks report on The Motley Fool and picked out two stocks that I really like, two companies with the characteristics of great forever investments that I think you can hold as part of your core portfolio.
Arista Networks is actually one of my favorite growth stocks as well as one you can put in your starter portfolio for years. The company was a pioneer in cloud networking and data centers, taking a huge amount of market share from slow adopters like Cisco Systems.
Sales have grown at an impressive 40% annual rate over the last three years but even more impressive is that operating income grew at a 54% pace which means the company is getting progressively more profitable, something that’s very difficult to do when you’re growing that fast.
Now the company is moving into routing and campus networks which presents yet another segment for growth. The ethernet market is still growing and will continue to do so for the next decade at least. Arista has a solid advantage and a rock-solid balance sheet with no debt and $1.5 billion in cash.
Our next stock for your start investing portfolio is one I’m sure you’ve heard of but maybe weren’t sure about buying.
Amazon would be a great starter stock on just its core ecommerce platform. Online sales are still just one-tenth of total retail sales in America and Amazon controls 44% of all online sales. That’s a huge runway as ecommerce takes a larger chunk of retail sales. Jeff Bezos is a wizard and has been positioning the company for massive growth in food and pharmacy also.
Shares of Amazon are up over 100-fold since the Motley Fool recommended it 16-years ago but still has a long way to go. Besides the ecommerce side, Amazon has a ginormous logistics distribution network that makes it a force in transportation and a web services offer that puts it in the growing cloud computing segment.
Investing in these starter stocks is going to give you a core portfolio that you can hold for decades without worrying about the company. Find best of breed companies with strong opportunities for growth in their industries and you’ll enjoy double-digit returns to fuel your portfolio. Check out that starter stock report on The Motley Fool for some ideas.
Leave a Reply